At UK£14.62, Is It Time To Put Morgan Sindall Group plc (LON:MGNS) On Your Watch List?

While Morgan Sindall Group plc (LON:MGNS) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the LSE over the last few months, increasing to UK£19.96 at one point, and dropping to the lows of UK£13.92. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Morgan Sindall Group's current trading price of UK£14.62 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Morgan Sindall Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Morgan Sindall Group

Is Morgan Sindall Group Still Cheap?

Good news, investors! Morgan Sindall Group is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 6.7x is currently well-below the industry average of 13.92x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Morgan Sindall Group’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Morgan Sindall Group look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 5.0% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Morgan Sindall Group, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since MGNS is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MGNS for a while, now might be the time to enter the stock. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MGNS. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Morgan Sindall Group, you'd also look into what risks it is currently facing. Our analysis shows 2 warning signs for Morgan Sindall Group (1 is concerning!) and we strongly recommend you look at these before investing.

If you are no longer interested in Morgan Sindall Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.